23 Feb

Millionaire by age 41


Posted by: Kristina Crosbie

Could you imagine retiring in your 40s? Get an inside look of a couple that was able to save 1.5 mil by their early 40s and has the option to retire!

Gerry and Fiona Garda of Vernon, B.C., have one big dream—to retire now. “I’ve been investing since I was 16 years old,” says Gerry, 41, an administrative assistant with the B.C. Ministry of Transportation. “In the early years I made and lost big money, but I always stuck with it—and it’s paid off. It’s been an exhilarating ride.”

Gerry and Fiona (we’ve changed their names to protect their privacy) have stock investments valued at $1.27 million and a pair of rental properties. After paying off their debts, their net worth would be well over a million. In fact, Gerry thinks he and Fiona can quit their jobs today and live off the income from their investments for the rest of their lives.

“I just finished a sabbatical from my job and it’s given me a taste for life outside the office,” says Gerry, who spent most of his year off being a stay-at-home dad to his two-year-old daughter, Phoebe. “I’m ready to move on to a new phase of my life.”

There is one wrinkle, however—they have another baby due in September. “Fiona and I have always lived on less than one income,” says Gerry. “But we know kids are expensive. Can we continue living frugally with two kids? We’re not sure.”

Fiona, who is 36, earns $22,000 a year as a part-time social worker, while Gerry earns $60,000. In their spare time, they do
volunteer work with the cancer society, several local charities, and with a girls’ orphanage in Costa Rica. “If we have enough money, why not just quit our jobs and do more of what we love—charitable work?” says Fiona.

Gerry has run the numbers and feels his family can live on $45,000 in after-tax income a year. But he’s not sure their investments will be able to generate enough money to cover their expenses for the rest of their lives. “I don’t mind working part-time a few more years if I have to,” says Fiona. “But I really think we may have enough assets to provide us with a good income to old age.”

Even if they have enough, there’s another problem: the couple’s portfolio is full of risky, volatile stocks. Gerry knows he needs to restructure his portfolio so that it is more conservative and tax-efficient. “I know I’m not the one to do that,” says Gerry. “I know nothing about conservative portfolios. It will be our biggest challenge.”

One of their strengths, on the other hand, is the fact that the Gardas have more than their stock portfolio to depend on in retirement. By the time Gerry turns 55, he expects to have paid off the mortgages on his two properties, which will provide $20,000 a year in rental income. He’ll also start collecting a pension of $1,600 a month, earned during his years with the provincial government. But even with all that, Gerry is apprehensive. “I think we’ll need $45,000 a year, but I could be wrong. We need to be certain we’re really ready to go it alone before we leave our jobs. Can you help us?”

Fiona has always been good with money. She grew up in Vancouver, where her mother was a nurse and her dad a car salesman. “My parents’ biggest investment was their home, which they bought in Vancouver for $60,000 in 1976,” says Fiona. “It’s worth $1.2 million today.”

Fiona worked part-time through high school at the local McDonald’s before enrolling at university in Victoria in 1992. During her four years there, she took part-time jobs while completing a bachelor’s degree in social work. By the time she graduated, she had $20,000 in the bank. “I never had student debt,” says Fiona. “I worked constantly, lived frugally and grew my savings the whole time I was at university.”

Gerry’s early home life wasn’t as comfortable. He was born in Regina, and when he was three his father left, leaving his mother to raise both him and his older brother, Matthew. She remarried when Gerry was 12. “Mom worked as a waitress during the day and attended university at night. When I was 10, she graduated with a teaching degree. She taught us kids to be industrious.”

At nine, Gerry had his own paper route. In high school he worked evenings at the local Woolco store and read investment books voraciously. “I just wanted to make money,” remembers Gerry. “Those were the days when you had to call your broker to buy and sell a stock. I wasn’t old enough, so I had my brother place the trades for me.”

Gerry studied for a couple of years at the University of Regina, but quit before earning his degree. Instead, he went to technical school where he studied resource management. All along, Gerry kept investing and his portfolio grew to about $18,000 in 1994. Then the bottom fell out. “I had all my money in gold stocks,” he says. “When the market turned, I lost everything. Even today, I won’t touch commodity stocks.”

In 1995, Gerry got a job with the Ministry of Transportation in Vernon, and with a small down payment he bought a house. That’s also when he met Fiona at a friend’s barbecue. A year later they moved in together. Gun-shy from his losses, Gerry temporarily gave up stock picking and concentrated on saving instead. “Fiona and I parked every penny we made in mutual funds for six years, and we had $150,000 saved by the time I turned 30. We were cheap. We didn’t own a car, we grew our own vegetables, biked everywhere and bought very little furniture.”

In 1997, the Gardas married and received a cash gift of $45,000 from Gerry’s mom. They invested the money, along with $20,000 of Fiona’s savings, in their home and the two rental properties they still own today.

It wasn’t until 2001 that Gerry decided to sell the $150,000 worth of mutual funds that he and Fiona had accumulated and give stock investing another try. “I’m drawn to small caps—especially when everyone hates them,” says Gerry. “If their price drops, I buy more. As long as the stock’s main narrative hasn’t changed, I’ll hold on.”


































Gerry is a focused investor. He only invests in sectors that he understands—communications, technology, and health care—and he never owns more than 10 stocks at a time. Most importantly, he stays engaged. “I spend three hours a day doing research. I ignore what’s happening in the daily news—that’s just noise.”

Right now, Gerry’s portfolio includes Cisco, Intel and RIM, as well as a couple of “cloud computing” companies that Gerry believes are the way of the future. “The new direction for tech stocks is in its infancy,” he says. “Tech stocks are just starting a new cycle of growth.” He’s quite happy to wait out a few ups and downs, as long as he knows he’ll never have to sell in a panic. “If I lost all my stock money tomorrow, I wouldn’t worry, but that’s because I earn a good salary. But I can’t invest this way if I don’t have a regular salary. Now that’s risky.”

In 2006, Gerry and Fiona discovered a new love: giving back to their community. They also have a connection with a special charity. “We were in a bar in a tiny town in Costa Rica,” says Fiona. “We asked what there was to see nearby, and one of the locals took us to a girls’ orphanage. We were hooked.”

The Gardas donate about $2,000 annually to the orphanage—enough to send a couple of girls to university every year. “Do you know how rewarding that is—knowing you can change someone’s life for so little?” says Fiona. “It’s a fantastic feeling.” 




































If the couple retires now, their big concern will be having enough income to pay expenses for the next 15 years, until they can get by on Gerry’s pension and their rental income. “For the near future, our investments have to do all the heavy lifting,” says Gerry. “That’s crucial for our plan to work.”

The Gardas are carrying some large debts. Their mortgage is structured as a $195,000 line of credit, which they service with the income form their stock portfolio. They also owe $313,000 in a margin account at 3%. Their two rental houses have mortgages totalling $410,000, which will be paid off by the time Gerry turns 55.

The couple has always kept their expenses low. With both of them working, they save more than $14,000 a year, which goes directly into RRSPs and Gerry’s stock portfolio. “We’re big do-it-yourselfers—renovations, cooking and gardening,” says Gerry. “It keeps costs down, savings up and us busy.”

One thing is certain: when the couple does retire, Gerry won’t miss his job one bit. “I’m just going through the motions now,” he says. “I want to do something more meaningful with my life. We’re keeping our fingers crossed, hoping a new life is just waiting for us to grab it.” 

What the experts say 

Karin Mizgala, CEO of Money Coaches Canada, says the Gardas will be relieved when they crunch the numbers. “Over the long run, their income will cover their expenses.” The key, she says, is the couple’s frugal lifestyle. “The less you spend, the earlier you can retire,” Mizgala says. “But few people ever consider a more frugal life until I walk through the numbers with them. They have become convinced by the media that they need $2 million before they can retire. For most of us, it’s much, much less than that.” Here’s what the Gardas should do.

Calculate what they have now
Once they pay off the margin loan and their line of credit, the Gardas’ investment accounts will be valued at about $920,000. This is the money they will have to depend on, at least until age 55, to fund almost all of their $45,000 in annual after-tax expenses.

Start deleveraging
The couple cannot retire with a leveraged stock portfolio. “They are in danger territory,” says Jim Otar, a Certified Financial Planner and author in Toronto. “Their exposure to risk is highly amplified.” Otar notes that a not-so-unusual 40% correction in their holdings means the couple would lose 62% of their net investments. “They should pay off all their debts before quitting their jobs,” says Otar.

Give the portfolio a makeover
Selling their stocks may take the Gardas up to three years, because it will trigger capital gains or losses. The Gardas need to spread these over two or three years to minimize taxes. They should get help from a tax accountant to do this.

Then the portfolio needs to be rebuilt. Laura Wallace, vice-president and portfolio manager with Scotia Asset Management in Toronto, recommends a mix of 50% equities and 50% fixed income. To ensure regular income, inflation protection and tax-efficiency, the portfolio should include at least 20 dividend-paying stocks, as well as government and corporate bonds with staggered maturities. Most of the dividend stocks should be Canadian, as the dividends get favourable tax treatment. “Such a portfolio can be expected to generate an after-tax return of about 5%—enough to cover their annual expenses,” says Wallace.

Consider working six more years 
Although Gerry and Fiona could probably retire today, the experts hesitate to recommend this strategy. That’s because as their kids get older, $45,000 in income may not be enough. “The likelihood that expenses will increase substantially after the kids turn five is high,” says Wallace.

That’s why if Gerry really wants to retire now, Fiona should consider keeping her part-time job for a few more years. “They should take only what income they need from the portfolio while Fiona is still working.” If Fiona is bringing in $20,000 after taxes, they will only have to draw about $25,000 from their investments, says Wallace. “This will provide a good financial cushion.”

Otar is more cautious. He’d like to see both Gerry and Fiona work six more years, until Gerry is 47. “If the couple is unlucky enough to experience a worst-case scenario in the coming years—higher inflation, a steep stock market decline, a crash in the housing market—their investments will take a big hit,” he says.

If the Gardas take Otar’s advice, then at age 55 their investment portfolio should still be worth about $1,000,000—even with $45,000 to $50,000 in annual withdrawals over those eight years. At that time, the couple will also have at least $1,600 in monthly income from Gerry’s government pension (a bit more if he works until 47) as well as $20,000 annually from their then fully paid-off rental houses. With CPP payments at 60, that should be more than enough to last the Gardas well into their 90s.

This article was posted on moneysense.ca

To get advice or a second opinion on ways to save money, feel free to contact Kristina Crosbie by emailing kcrosbie@dominionlending.ca






21 Feb

10 Home Improvement Projects that Add Value


Posted by: Kristina Crosbie

Knowing which renovations to put money into can make a huge difference! 

Can’t stand your scary, cobwebby basement one more minute? Is it past time to replace the pink-and-aqua tiles and porcelain in the master bath? Maybe you’re sick of the curling, chipped vinyl floor, the tacky cabinets, and cramped layout of your kitchen.  Perhaps you’re trying to convince your partner that the siding is sad and stucco would be stupendous. But your partner wants to build a deck…

What are the best home improvement projects to undertake? It depends on your goals and plans. If you’re trying to sell your property soon for the highest possible price, your priorities are likely somewhat different than if you’re planning to stay for a few years and want to improve your family’s quality of life.

If you’re selling, focus on the renovations a buyer would be most likely to undertake, not those you’re most itching to do. You might dream of putting French doors and a Juliet balcony in the master bedroom, but if your kitchen is twenty-five years old—or even fifteen—you’re better off directing your home improvement dollars there. Buyers generally focus on kitchen and bathroom quality, along with overall living and storage space. Kitchen and bathroom remodelling projects are among the most disruptive undertakings, so buyers especially appreciate upgraded fixtures, appliances and décor in these rooms.

Here are ten worthwhile home improvement projects and the percentage of cost typically recouped at resale (in a seller’s market):

1. Painting
If you’re only going to do one thing, paint. Interior/exterior painting is one of the very few improvements on which you are likely to realize a profit—as long as you choose tasteful, current, neutral colours and the work is very professional. Payback: As much as 300%

2. Kitchen remodelling
Typically one of the most expensive improvement projects, and you can quickly run up a huge bill. Careful planning and shopping will help minimize costs here. When remodelling the kitchen, remember to keep the project in line with the style and quality of the rest of the house and neighbourhood.  Just as there’s no point in putting a pricey granite countertop on dated-looking 1970s cabinets, there’s no point in installing a $50,000 kitchen in a $200,000 house.  Payback: 68-120%.

3. Bathroom addition
If your home has only one bathroom and is meant to house more than two people, a bathroom addition should be one of your top priorities. If most homes in your neighbourhood have two, three or more bathrooms, and yours has just one or one-and-a-half, you will definitely increase your property value by adding a bath. Payback: 80-130%.

4. Bathroom remodelling
Upgrading a pokey bathroom will enhance the value of your home and add to your daily comfort and enjoyment. White porcelain is the safe, timeless choice here. Payback: 65-120%.

5. Finishing unfinished space
Whether it’s an attic or a basement, by finishing these spaces you add significant value to your home, increasing square footage without having to build. Payback: 50-90%.

6. Window/door replacement
If your windows or doors are wasting energy or simply decrepit-looking, replacements can be an excellent use of your home improvement dollars. Stick to standard styles; odd shapes and highly customized arrangements do little for resale value. Payback: 50-90%.

7. Deck addition/improvement/expansion 
Decks are one of the few exterior improvements with any significant return, apart from painting.Payback: 65-90%.

8. Additions of bedrooms, family rooms, sunrooms, conservatories, garages, etc.
Increasing square footage is almost always an excellent use of remodelling dollars, but don’t expand your home so much that there’s little outdoor space left. Payback: 50-83%.

9. Home office remodelling
This project is becoming increasingly popular. Be sure to plan for plenty of electrical and cable outlets to accommodate all the required machines and gadgets. Payback:  60-73%.

10. Energy efficiency retrofits
If your primary concern is return on investment, proceed with caution. Some retrofits, like better insulation and high-efficiency furnaces, pay for themselves relatively quickly. Others, like solar panels, heat recovery ventilators, and tankless water heaters, may take years to pay for themselves. Payback: Highly variable.

Two projects that are unlikely to pay off at resale: swimming pools (which may even adversely affect your property value) and excessive landscaping (buyers may admire it but few will pay extra tens of thousands even if that’s what you spent to improve the grounds). And remember that badly done remodelling/renovation projects will cost you in two ways. You won’t pay just for labour and materials; you’ll pay when buyers see a project that has to be redone. 

This article was posted by the HGTV.ca Editorial Team

If you are considering renovating and looking for options to finance your renovations project, Contact Kristina Crosbie, Mortgage Agent, at kcrosbie@dominionlending.ca.

14 Feb

Handle Lines of Credit With Care (And Why Your Bank May Not Be Watching Out for your Interests)


Posted by: Kristina Crosbie

Recently this article appeared in the Globe and Mail and it’s too good not to share. While lines of credit can be a great asset for you and your family, and provide you a lot of comfort during unplanned emergencies, the rate at which banks are giving out Lines of Credit is alarming.

Remember, you should always get a second opinion! If you go into the bank for your mortgage, and they instantly try cross-selling all sorts of other products, it’s time to get in touch with a Mortgage Broker to make sure you’re getting a) the Mortgage that’s right for you, and not just what the bank wants to sell you, b) products complimentary to your mortgage that you actually need, and not just what the bank wants to sell you.

I’m always available for second opinions. You can email me at kristina@smithsfallsmortgages.ca or call me at 613-283-8763.

Enjoy the article!


Give people enough line of credit and they’ll hang themselves with debt.

The bad boy of borrowing products – that’s the line of credit. Recently, the federal government asked the banks to stop blithely handing out home-equity credit lines to people. In his new book The Wealthy Barber Returns, David Chilton writes that credit lines can be an excellent financial tool for disciplined people. “The other 71.9 per cent of Canadians, however, should be careful. Very careful.”

Debt is never more comfortable than it is with the line of credit because money is instantly accessible and the rules for paying it back are slack. You can’t ignore a credit line, but you can stretch repayment out indefinitely. And then there’s the rising interest rate risk. Lines of credit are floating rate debt, and that means you’ll pay more every time rates edge higher.

Here are some tips for managing a line of credit from Stephanie Holmes-Winton, who as president of The Money Finder trains financial advisers to address their clients’ debt problems:

1. If you’re bad with debt, a line of credit won’t save you

Ms. Holmes-Winton says she used to advise people with high credit card debts to switch to a credit line where the interest rate is vastly lower. What she found was that these people simply went and ran up the credit line balances.

“I might as well have been blindfolding these people, spinning them in a circle, handing them a Skilsaw and then wondering why they cut their finger off,” Ms. Holmes-Winton said.

2. Your LOC is not an ATM

Ms. Holmes-Winton has come across people who take out $100 here and there from their credit lines to help them make it through the week. That’s called living beyond your means. You end up with an amorphous mass of debt racked up for purchases that brought only a moment’s satisfaction.

3. Beware the LOC-dependent lifestyle

Having a permanent balance on your LOC is an admission that you can’t afford your current level of spending. Even if the payments are affordable, they’re burning up money that could be used for savings or other more productive purposes. “What I don’t want people to do is get in the habit of paying $10,000 down on their line of credit, and then racking it back up again by $10,000,” Ms. Holmes-Winton said.

She sometimes suggests people take advantage of the comparatively low cost of a credit line to pay off debt at much higher interest rates (credit cards are the classic example). She says that 10 years is the maximum timeframe for getting this line of credit debt paid off. Smaller purchases, say $5,000 or less, should be paid back in 24 months or less, while 48 months is realistic for purchases in the $10,000 range.

4. Turn your LOC into a loan

Home-equity lines of credit often allow you to divide your borrowing into different chunks, or sub-accounts, Ms. Holmes-Winton said. To impose some discipline in repaying a line of credit debt, ask your lender to set up automatic monthly payments to a sub-account that combines both principal and interest. Set the payments so you’ll have your debt paid down over a set period of time.

5. Plan for higher interest rates

Credit lines are priced off the prime rate, which today is 3 per cent. As recently as 2006-07, the prime sat around 6 per cent. That’s the background for Ms. Holmes-Winton’s suggestion that people estimate whether they can afford to carry the current balance on their LOC at double today’s rates.

6. Don’t buy a car with your line of credit

People with small credit lines may find that the cost of buying a car uses up too much of their borrowing room, Ms. Holmes-Winton said. Also, adding the car to a bunch of other debts on the credit line can slow the repayment process. “It’s very easy for the lines to get blurry. We end up paying for these cars for 12 or 15 years and we can’t even tell when we’ve fully paid for them.”

7. LOCs can be a lifesaver

Ideally, you won’t buy things until you’ve saved enough money to pay cash, Ms. Holmes-Winton said. “That works with maybe a new sofa or redoing your bathroom for aesthetic reasons, but it’s not the same reality as if you have a leak in your bathroom that you must fix.”

In money emergencies like this, a LOC is the smart way to borrow. If you can handle it, that is.


Home equity vs. unsecured lines of credit

  Home equity Unsecured
Definition Your home secures your debt No collateral pledged
Rates Your bank’s prime rate in rare cases, or prime plus 0.5 or 1.0* Prime plus 1 to 7 percentage points or so
Repayment You can pay interest only on a monthly basis Usually a minimum of 2 or 3 per cent of your balance per month, or a minimum dollar amount
Set-up fees Can cost several hundred dollars to cover legal and other fees None
Limit Can be up to 80 per cent of the equity in your home Typically much less than home equity credit line

*the prime rate is currently 3 per cent

This article originally appeared at:


Note from Kristina:

Remember, you should always get a second opinion! If you go into the bank for your mortgage, and they instantly try cross-selling all sorts of other products, it’s time to get in touch with a Mortgage Broker to make sure you’re getting a) the Mortgage that’s right for you, and not just what the bank wants to sell you, b) products complimentary to your mortgage that you actually need, and not just what the bank wants to sell you.

I’m always available for second opinions. You can email me at kristina@smithsfallsmortgages.ca or call me at 613-283-8763.

8 Feb

8 Questions to Help You Save More


Posted by: Kristina Crosbie

If you want to save money, and I mean really save money, then you’re going to have to stop buying Stuff. You have reduce the amount you consume. Today I want to share the system I’ve been using for the last 15 years to reduce my spending and make sure I don’t get tricked out of my hard-earned cash.


Question 1: Stop! Is this a good decision?
Before you reach for your cash, before you grab your credit card, before you pick up the item up from the sales rack, pause for just a minute. Stop yourself and think about whether or not you are about to make a good or a bad decision. A marketer or salesperson’s job is to make you think you need something that five minutes earlier you didn’t know existed. Find a way to trigger your internal alarm bell, so you can stop for a second and move on to question number two.

Question 2: Are you hungry?
If your belly is empty then your decision making is impaired. Our bodies get confused between the desire for food and inedible objects. So if you are hungry, step away, eat something, then wait for 15 minutes before moving on to question three.

Question 3: Is there something else?
There are so many other things you could buy. Is this item really the one you want to spend your hard-earned money on? Thereare other things you could achieve with this money. Will you be limiting yourself by making the purchase? If you have decided that this is the only thing you want, go to question four.

Question 4: Is it worth the effort?
Every time you reach for your cash, ask yourself if it is really worth the effort. If every $15 you spend is an hour you’re going to have to work, is it worth the effort? Or should you leave your money in your wallet? (It’s so much easier than having to earn extra money!) Now, if you have decided the purchase is really is worth the bother, move on to the fifth question.

Question 5: What will you gain?
Next, work out what you or your family will gain by buying the item. What are the long-term consequences? Will it improve your health and happiness or genuinely give you more free time? How? If you cannot answer these questions positively, then leave your money in your wallet. It is important that you be really skeptical when you answer this question. Now move to question six.

Question 6: What will you lose?
When you buy an item, you both gain something and lose something. If you are lucky, the only thing you lose is cash and thetime it took you to earn that money. But this is not always the case. A great example of this is a computer game. You gain entertainment, but you might lose quality time with your family. Once you are certain you have accounted for everything you could lose, move on to the next question.

Question 7: Is there a better way?
Now it is time to shop around for a better price and work out the smartest way to buy it. How can you get the best value for your dollar in the minimum time possible? Occasionally, working it out for yourself will take more time than you save (when calculating your time as an hourly wage), but you will get satisfaction in knowing that you’ve found a great deal and are doing the best for your family. Once you have researched your purchase and found the best way to buy it, go to question eight.

Question 8: Do you have the cash to spare?
Most of the time, buying things on credit is stupid. So if you don’t have the cash, remain free, walk away, and live happily ever after. Consumer purchases aren’t worth burdening yourself with debt. This means you should avoid credit cards, layaway, interest-free loans, mortgage refinancing facilities, etc. Only buy something if you have the spare cash — and if you don’t, go home and save until you do.

If want to save yourself some money, write down the eight steps and put them in your wallet! Every penny you save is one you don’t have to earn!*


Question 9: Is the bank giving me the best deal?

As a Mortgage Broker I see a lot of clients that automatically sign renewal notices, or offers for new home financing, or any other type of mortgage, and many people assume they’re getting the best deal and sign on the spot.


DON’T DO THIS! You could probably save thousands (like tens of thousands) of dollars by getting a second opinion on what your bank is offering you. Banks take for granted that many people will not research if there are less expensive options out there…so they’ll offer you a less than stellar rate, or “forget” to tell you about additional savings that you could be missing out on.

My advice:
Never sign what the bank sends you. Always get a second opinion from a Mortgage Broker…after all, our job is to Save You Money!

If you would like a second opinion on something the bank sent you feel free to contact me for a no-obligation review by emailing kcrosbie@dominionlending.ca

*This article, with the exception of Question 9, was originally published here: http://www.forbes.com/sites/moneybuilder/2012/02/08/8-questions-to-help-you-save-more/

7 Feb

Money Smarts Series at Greenboro District Library (Ottawa)


Posted by: Kristina Crosbie

There’s a Money Smarts Series in Ottawa that I wanted to let you know about.

Taking care of your financial health is very important, and it’s always a good idea stay educated, and learn how you can be Money Smart!


Money Smarts Series

Location: Greenboro District Library

363 Lorry Greenberg Drive

Ottawa, K1T 3P8


Dates: Thursday, February 9th and Thursday, February 16th

Time: 630 – 8pm

Cost: free


IMPORTANT: If you attend the Money Smarts series make sure you get a second opinion on any of the advice you are receiving. A second opinion makes sure that the information and advice you’re receiving is suitable for you, and in most cases can end up saving you a significant amount of money.

If you attend this free event, before you put any of the advice into action please feel free to double check with me to make sure you’re actually doing what’s best for you and your family.

You can contact me for a free second opinion at kcrosbie@domionionlending.ca or 613-283-8763


Let’s stay connected!

Facebook: http://www.facebook.com/pages/Mortgages-Kristina-Crosbie/166592643413453

Twitter: https://twitter.com/#!/KristinaCrosbie

2 Feb

Getting a Mortgage May Get Harder This Year


Posted by: Kristina Crosbie

The federal housing agency is serving notice to banks and other lenders that it is nearing the limit on mortgage insurance it can offer them.

The Canada Mortgage and Housing Corp. said Tuesday it “has recently received an unexpected level of requests for large amounts of CMHC portfolio insurance.”

“To ensure equitable access to portfolio insurance within CMHC’s annual limits, an allocation process is being established, which has caused some delays.”

CMHC said in a release that its notice affects only lenders and will not decrease the availability of its mortgage loan insurance for qualified homebuyers and will not affect the cost of buying a house.

The CMHC reported at the end of 2011 that it was backing $541 billion in mortgages.

The federal government, which ultimately must cover the Crown corporation’s mortgage guarantees, has imposed a $600-billion cap on how much liability the CMHC can take on.


What does this mean for you, if you’re looking to get a mortgage this year?


Rules may be tightening, and if you have less than 20% down payment it may be more difficult to get a mortgage. Also, CMHC stated it will still be providing insurance to “qualified homebuyers” so it’s more important than ever to make sure you do quality for a mortgage.

What can you do?

Make sure you get a Mortgage pre-approval as soon as possible to make sure you know where you stand, how much you can borrow and if you need CMHC insurance.

With rates as low as they are these days, it would be a shame to miss out on getting a great mortgage because you can’t get the CMHC insurance you need.


If you’re thinking of getting a mortgage in the next 6 months make sure you get in touch with me, Kristina Crosbie, Mortgage Broker,  within the next 7 days so we can get you pre-approved, and pro-actively plan for what you will need to buy a house.


Kristina Crosbie, Mortgage Broker


Smiths Falls, Ontario


*This article was originally posted at: http://www.cbc.ca/news/business/story/2012/01/31/cmhc-mortgage-limit.html